MONTHLY BILLING PROGRAM IMPORTANT UPDATES AND CHANGES TO OUR DIRECT BILL PLANS

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1 February 2, 2009 TO ALL CONNECTICUT AGENTS MONTHLY BILLING PROGRAM IMPORTANT UPDATES AND CHANGES TO OUR DIRECT BILL PLANS We are very excited to announce our newest billing enhancement designed to provide your clients with the ability to budget premium payments on a monthly basis. Effective immediately we now offer a full monthly billing option. Here is how the plan works: New Business A 15% deposit is required for all new business. The remainder is billed in 10 monthly installments (for a total of 11 payments for the first year). The 12 th payment is the downpayment for the renewal. Once the initial due date is established all subsequent payments are due on the same date every month. Renewals The renewal premium is divided into 12 payments. The first bill for 1/12 th of the premium is due as the last payment of the prior term. The next 11 payments are all 1/12 th of the premium. All bills are due on the same date every month. Below is a complete listing of all our payment options as well as details of our billing program. NLC s Billing Options Insureds may pay their bills traditionally by receiving their bills in the mail and making payments by mail directly to our lock box. Insureds may also pay their bills on-line. Insureds sign up for this service at our web site, Enrollment will allow them to receive their bills via their address. They will also have the ability to make their payments on-line by clicking the Pay My Bill link. Insureds may also pay via credit card. The insured simply signs up for on-line billing and selects the drop down menu that allows them to make the payment from either their checking account or their credit card account. Insureds may also have the payments automatically deducted from either their checking or credit card accounts. When an insured signs up to pay their bill on-line, they can have the bills automatically presented to their account holder for automatic payment from those accounts. Agents may also make payments to an insured s policy. There are two methods: 1. If an insured gives you a check, you may enter the insured s specific check information, thereby making the payment for them online. You may then destroy the check and the payment is complete. 2. You may also make payments to an insured s policy from your account. If an insured pays you cash, you may deposit that into your account and direct an online payment from your account to their policy. All you need do is send an to billing@nlcinsurance.com to sign up. Within 24 hours you will be up and ready to go!

2 WHAT ARE THE FEES ASSOCIATED WITH OUR BILLING PLANS? Our service fees remain unchanged: Service Charge with all installments $ 4.00 Late Fee for payments made while under notice for non payment $10.00 Reinstatement fee for payments made on policies that have actually lapsed $10.00 Fee for payments returned unpaid $15.00 WHAT HAPPENS TO INSUREDS WHO CANCEL FOR NON-PAYMENT? While everyone can miss a payment once in a while, we have found that some insureds demonstrate a pattern of payment problems. These insureds increase our expenses due to additional mailing and processing costs. More important, however is that our loss experience on business with payment problems is significantly worse than for the vast majority of our business which does not have payment problems. The loss and process expenses are such that we have developed the following process to ensure that our insureds maintain acceptable payment practices. There will be no changes in our billing if an insured has one non-payment notice per policy term. If a second notice is generated during the term, the amount due will be for the current installment plus one additional installment and fees. If a third notice is generated during the term, the amount due will be for the remaining balance of the policy plus fees. If a notice is generated for a policy with more than four non pay notices during the previous three terms, the amount due will be the remaining balance of the policy. Generally, fees will not be waived unless it is an error on the part of the insured s bank or NLC. Remember, insureds may sign up for any of the on-line services described above at our general web site of If you have any questions about any of this information, please contact our billing department at extension Thanks for doing business with NLC! Sincerely, George W. Francis, AU Vice President - Marketing

3 CONNECTICUT PERSONAL EXCESS MANUAL CHECKING SLIP THESE CHANGES ARE APPLICABLE TO ALL POLICIES WRITTEN ON OR AFTER FEBRUARY 1, 2009 Personal Excess Manual Direct Bill Page 1 CONNECTICUT PERSONAL EXCESS MANUAL COMPANY PAGES CURRENTLY IN EFFECT Personal Excess Pages 1 4 March 1, 2006 Direct Bill Page 1 February 1, 2009 Direct Bill Page 2 April 1, 2007 Connecticut Personal Excess -1- Checking Slip

4 CONNECTICUT PERSONAL EXCESS LIABILITY POLICY AT-A-GLANCE COVERAGE HIGHLIGHTS Coverage may be purchased for limits of up to $2,000,000 of excess insurance over the required underlying limits A $250 self-insured retention applies Legal defense coverage is included outside policy limits Our Personal Excess Liability Policy coverage is broader than underlying personal liability insurance as demonstrated in the following examples: Liability coverage is included for damage to property in the care, custody, or control of the insured The scope of coverage as respects personal activities is limited by a only a few exclusions REQUIRED MINIMUM UNDERLYING POLICY LIMITS All underlying coverages must be written by NLC Insurance Company except where noted below. Underlying coverages for antique autos and watercraft, if not with NLC must be written through your agency. Underlying Coverage/ Exposure: Homeowners Personal Liability Automobile Liability (see exception below for youthful operators) Where Youthful Operators are present Antique Vehicle Liability Watercraft Liability Rental Property Premises Liability Minimum Required Limit(s): $300,000 $100/300/100 or $300,000 CSL $250/500/100 or $300,000 CSL $100/300/100 or $300,000 CSL $300,000 $300,000 NOTE REGARDING AUTO COVERAGES: If the underlying automobile liability coverages were written with a carrier other than NLC prior to March 1, 2006, we will continue to allow eligibility for the Personal Excess Liability Policy, as long as those underlying coverages are maintained at minimum limits of either $250/500/100 or $500,000 CSL, controlled within your agency and are placed with an A.M. Best B+ VI or better carrier. NOTE REGARDING RENTAL PROPERTY COVERAGES: If the underlying premises liability coverages were written with a carrier other than NLC prior to March 1, 2006, we will continue to allow eligibility for the Personal Excess Liability Policy, as long as those underlying coverages are maintained at minimum limits of $300,000 CSL, controlled within your agency and are placed with an A.M. Best B+ VI or better carrier. CT Page 1 March 1, 2006

5 CONNECTICUT PERSONAL EXCESS LIABILITY POLICY AT-A-GLANCE ELIGIBLITY New business - underlying automobile coverages must be written with NLC Insurance Companies. Auto renewal business written prior to 3/1/06 must be controlled in the agent s office. This business must be in a preferred market with a company with a Best Rating of B+ VI or better. Underlying coverage for antique automobiles must be controlled in the agent s office. Primary and secondary homeowners policies must be written with NLC Insurance Companies. Rental properties must be written with NLC Insurance Companies. Watercraft underlying coverage must be controlled in the agent s office. Minimum driving experience of 5 years for all principal operators is required. Stable employment with a favorable work or business reputation is required. Family type cars are acceptable. Cars should not be more than 10 years old unless a newer car is also being written. INELIGIBLE ATTRIBUTES Individuals who are employed as: Politicians Public lecturers TV and radio personalities Law enforcement officials Newspaper or magazine reporters, editors, or publishers Labor leaders Prominent figures such as actors, actresses, professional athletes or others in the public limelight. Persons who represent a moral hazard or anyone who has been sued for libel or slander. No violations or accidents are allowed to have taken place within the past 36 months. Further, no major violations can be listed as having occurred in the last 10 years. No excessive automobile mileage (over 50,000 miles per year). No frequency of not at fault accidents which might indicate a lack of defensive driving. Snowmobiles, motorcycles, personal watercraft or similar exposures are ineligible and are excluded. Properties located outside of Connecticut, Rhode Island or Massachusetts are not eligible. Swimming pools which are not fenced or that have diving boards or slides are unacceptable exposures. Motorhomes are not eligible for coverage. 3 or 4 family dwellings that are rented to others are ineligible for coverage. Note that 3 or 4 family dwellings currently written on an NLC Personal Excess Liability Policy will be grandfathered. Properties that have trampolines or skateboard ramps are not eligible for coverage. Non-resident co-owners of property must each carry Personal Excess Liability policy coverage in accordance with underlying requirements listed above. Daycare exposures provided by any insured are ineligible and are excluded. CT Page 2 March 1, 2006

6 APPLICATIONS CONNECTICUT PERSONAL EXCESS LIABILITY POLICY GENERAL UNDERWRITING RULES A completed / signed ACORD Personal Umbrella application is required for all new business. NO BINDING AUTHORITY No policy or endorsement may be bound prior to the date of receipt by NLC Insurance Companies. Telephone authorization is offered for your convenience. POLICY TERM All policies are issued for one year and are subject to a minimum earned premium. LIMITS OF LIABILITY Coverage may be purchased with limits of $1,000,000 or $2,000,000. The policy limit is applicable to each occurrence in excess of the underlying limits, or where applicable, the selfinsured retention. Your underwriter must approve limits in excess of $1,000,000. UNDERLYING RESTRICTIVE ENDORSEMENT Any insured having a restrictive endorsement or exclusion attached to the underlying coverages, such as an animal liability or trampoline exclusion that would cause the Personal Excess Liability Policy to drop down to provide coverage are not eligible. EXCLUSION FOR FUNGI OR BACTERIA Coverage is excluded when a claim is made or a suit is brought against an insured for damages related to occurrences arising from fungi and/or bacteria. BUSINESS EXPOSURES The policy is designed to cover liability exposures arising from personal activities. The only business or business property coverages eligible and /or afforded are: Business automobiles regularly furnished for the insured and/or spouse, and specifically listed on the Personal Excess Liability Policy declaration page with associated underlying policy information. One or two family dwellings are acceptable up to a combined maximum of six owned rental units. Business exposures incidental to non-business exposures and covered by an underlying policy listed on the declarations of this policy. This will usually be a homeowner policy. ADDITIONAL INSUREDS Coverage may be extended to an additional insured having an insurable interest, provided the coverage is available under the schedule of basic policies. This coverage is provided by endorsement NPUP-03 at a charge of $10. CT Page 3 March 1, 2006

7 CONNECTICUT PERSONAL EXCESS LIABILITY POLICY RATES Effective 3/1/06 Territory 1 Personal Liability Exposures Remainder of State Territory 2 Cities of Bridgeport, Hartford, New Haven & Waterbury Primary residence Secondary residence Swimming pools (refer to eligibility rules) Automobile Liability Exposures: Initial vehicle With underlying liability limits at $250/500/100 or $500,000 CSL Each additional vehicle Antique vehicles Underlying auto liability not written with NLC Charge applies per policy. Initial vehicle With underlying liability limits at Each additional vehicle $100/300/100 or $300,000 CSL Antique vehicles Operators with < 5 years experience or < 25 years of age Trailers Business Exposures Charge applies per operator. Refer to Required Minimum Underlying Policy Limits 25 ft. or less in length >25 feet in length Home based or incidental business One to two family dwellings rented to others (Subject to a maximum of 6 units) Watercraft Liability Exposures (under 26 feet overall): Sailboats with or without auxiliary power or outboard motors under 25 hp per rental unit per rental unit 0 0 Powerboats up to 50 hp Powerboats 51 hp. to 150 hp Powerboats 151 hp. to 200 hp All other watercraft Refer to Company Underwriter $2,000,000 Limit of Coverage Multiply $1,000,000 premium by 1.75 MINIMUM EARNED PREMIUM CT Page 4 March 1, 2006

8 CONNECTICUT NLC PERSONAL LINES DIRECT BILL PAYMENT PLANS Line Of Business Policy Term Number of Payments Available Automobile 1 year 4, 10 or Monthly 6 month 2 or 4 Dwelling Fire 1 year 5 or Monthly 6 months (vacant Dwelling 2 Program only) Homeowners 1 year 5 or Monthly Personal Excess 1 year 2 or Monthly Mobile Home 1 year 5 or Monthly PAYMENT PLAN DESCRIPTIONS Monthly Payment Plan for annual policies New business 15% down payment, remainder billed in 10 monthly installments* Renewals 12 installments billed monthly.* 2 Payment Plan for 6 month policies (Automobile & Dwelling Fire): 50% due on the effective date of the policy (or 25 days from process date whichever is greater). 50% plus service charge will be billed 30 days later. * 2 Payment Plan on annual policies (Personal Excess with premium over $200) 50% due on the effective date of the policy (or 25 days from process date whichever is greater). 50% plus service charge will be billed 5 months later. * 4 Payment Plan on annual policies (Automobile): 25% due on effective date of the policy (or 25 days from process date whichever is greater). 25% will be billed on the effective of the policy. * 25% will be billed 120 days from the effective date of the policy. * 25% will be billed 210 days from the effective date of the policy. * 4 Payment Plan on 6 month policies (Automobile): 25% due on effective date of the policy (or 25 days from process date whichever is greater). Remainder will be billed in 3 equal monthly installments.* 5 Payment Plan on annual policies (Homeowners, Dwelling Fire & Mobile Home): 20% due on effective date of the policy (or 25 days from process date whichever is greater). Remainder will be billed in 4 equal monthly installments.* 10-Payment Plan on annual policies (Automobile): 15% due on effective date of the policy (or 25 days from process date whichever is greater). Remainder will be billed in 9 equal monthly installments. * * There is a $4 charge for each installment. Connecticut Personal Lines Direct Bill February 1, 2009

9 E - BILL Policyholders can enroll in NLC s E-Bill program at the company s web site, The E-Bill program allows an insured to receive bills from NLC at their address and to make payments at the company web site. Policyholders can also make premium payments through their bank s on-line billing program. SPECIAL NOTES Insufficient Funds: For any payment not honored by the insured s bank, a $15 fee will be charged. Late Payment Fee: A $10 fee will be charged to an insured s policy each time that a Statutory Notice of Intent to cancel is issued in a policy term. Reinstatement Fee: If we agree to reinstate a policy, $10 reinstatement fee will be charged. Payment Processing: A mailing envelope addressed to NLC s lockbox in Chelsea, MA is included with each billing statement. Payments are recorded in Chelsea and transmitted to NLC once a day. The address for our lockbox is: PO Box 9229 Chelsea, MA Dwelling Under Construction: When issuing a policy on a dwelling which is under construction, please provide the mailing address of the insured and show the new home as the described premises. Questions: Call the Direct Bill Unit between 8:15 and 4:15. Connecticut Personal Lines Direct Bill April 1, 2007